Being an Investor in a Trader's Market

Carl Mathison  Jul 01, 2009 2:25 pm

Being an Investor in a Trader's Market
 
Opportunities still exist. Here's how to spot them.
 

 
For example, the recent March lows provided excellent opportunities to establish and add to core holdings. Without having to time the market, I was able to buy at multi-year lows and sell into the strength the market presented as it channeled to highs near 956 on the S&P 500.

On May 13, I posted the chart below cautioning I'd reached the upper end of the channel and the 200-day market value adjustment (MVA) loomed just above around 952. I cautioned readers to be ready for some profit-taking around that level.

                                   
Click to enlarge.


As the chart below illustrates, Mr. Market obliged, pulling back to the lower end of the channel around 878 on the S&P. It then held the 875 level through the rest of May in an 880-920 trading range -- with some very high volatility -- before running through 940 and establishing the recent high at 956.


Click to enlarge.


Notice how the index spent the first 2 weeks of June attempting to close above the 950 level -- without success. Also note how 950 has become substantial upside resistance. At this point, the 20-day MVA is also providing short-term resistance.
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